Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC,
NYSE:ECCA, NYSE:ECCB, NYSE:ECCY, NYSE:ECCZ) today announced
financial results for the quarter and fiscal year ended December
31, 2017, net asset value (“NAV”) as of December 31, 2017 and
certain portfolio activity through February 15, 2018.
FOURTH QUARTER AND FULL YEAR 2017 HIGHLIGHTS
- Net investment income (“NII”) and
realized capital gains of $0.49 per weighted average common
share1.
- NAV per common share of $16.77 as of
December 31, 2017.
- Fourth quarter 2017 GAAP net income
(inclusive of unrealized mark-to-market gains) of $12.6 million, or
$0.68 per weighted average common share.
- Weighted average effective yield of the
Company’s collateralized loan obligation (“CLO”) equity portfolio
was 14.42% as of December 31, 2017.
- Deployed $22.9 million in net capital
and received $34.0 million in cash distributions from the Company’s
portfolio in the fourth quarter of 2017.
- 3 of the Company’s CLOs were reset
during the fourth quarter of 2017.
SUBSEQUENT EVENTS
- NAV per common share estimated to be
between $17.12 and $17.22 as of January 31, 2018.
- Deployed $36.6 million in net capital
from January 1, 2018 through February 15, 2018; received cash
distributions from the Company’s portfolio of $21.7 million over
the same period.
- In January 2018, the Company completed
an underwritten public offering of 2,242,500 shares of its common
stock (including full exercise of the underwriters’ overallotment
option) resulting in net proceeds to the company of approximately
$38.8 million after payment of underwriting discounts, commissions
and estimated offering expenses.
“We continued to be active in terms of our investment and reset
activity in the fourth quarter,” said Thomas Majewski, Chief
Executive Officer. “Our investment portfolio continues to generate
cash flows and we deployed $52.6 million in gross capital during
the quarter as we sought to capitalize on strong CLO debt demand.
We were also able to complete additional resets of CLOs within our
portfolio – as we have noted in the past, we believe that CLO
resets help generate higher cash flows in the future. NII and
realized capital gains per share went from $0.45 per common share
in the third quarter to $0.49 per common share in the fourth
quarter, a 9% increase. The pace of loan repricings has slowed
significantly and recently issued CLOs in the market have achieved
even tighter debt spreads. We continue to focus on the long term
and during periods of strong credit market conditions we are
seeking to lock in longer and lower cost liabilities, and in recent
periods we have achieved some of the lowest debt spreads that the
Company has experienced for its investments.”
“In January 2018, we completed an equity capital raise
generating net proceeds of approximately $38.8 million,” added Mr.
Majewski. “We are putting the capital to work opportunistically
into investments that we believe will create additional long-term
value for our stockholders. In addition, we will continue to
actively manage our portfolio and, where we think it appropriate,
expect to enhance our CLO reset activity.”
FOURTH QUARTER 2017 RESULTS
The Company’s NII and realized capital gains for the quarter
ended December 31, 2017 was $0.49 per weighted average common
share. This compared to $0.45 per weighted average common share for
the quarter ended September 30, 2017, and $0.54 per weighted
average common share for the quarter ended December 31, 2016.
For the quarter ended December 31, 2017, the Company recorded
GAAP net income of $12.6 million, or $0.68 per weighted average
common share. Net income was comprised of total investment income
of $16.6 million, net unrealized appreciation (or unrealized
mark-to-market gain on investments) of $3.5 million, and net
realized capital gains on investments of $1.1 million, offset by
total expenses of $8.6 million.
NAV as of December 31, 2017 was $315.3 million, or $16.77 per
common share, which is $0.10 per common share higher than the
Company’s NAV as of September 30, 2017, and $0.71 per common share
lower than the Company’s NAV as of December 31, 2016.
During the quarter ended December 31, 2017, the Company deployed
$52.6 million in gross capital and $22.9 million in net capital.
The weighted average effective yield of new CLO equity investments
made by the Company during the quarter, which includes a provision
for credit losses, was 17.25% as measured at the time of
investment. Additionally, during the quarter, the Company received
$29.8 million of proceeds from the sale of investments and
converted 2 of its existing loan accumulation facilities into new
CLOs. 1 of the Company’s CLO investments was called during the
quarter.
During the quarter ended December 31, 2017, the Company received
$34.0 million of cash distributions from its investment portfolio,
or $1.83 per weighted average common share, including amounts
received from called investments. Excluding proceeds from called
investments, the Company received cash distributions of $1.23 per
weighted-average common share during the quarter.
During the quarter ended December 31, 2017, 3 of the Company’s
CLOs were reset, bringing the total number of such CLO equity
positions that were refinanced or reset during the year ended
December 31, 2017 to 26 and 6, respectively.
As of December 31, 2017, the weighted average effective yield on
the Company’s CLO equity portfolio was 14.42%, compared to 15.29%
as of September 30, 2017 and 17.48% as of December 31, 2016.
Pursuant to the Company’s “at-the-market” offering program under
which the Company may issue shares of common stock and 7.75% Series
B Term Preferred Stock due 2026 (“Series B Term Preferred Stock”),
the Company sold 288,646 shares of common stock during the fourth
quarter for total net proceeds to the Company of approximately $5.3
million. The Company issued no shares of Series B Term Preferred
Stock during the quarter.
FULL YEAR 2017 HIGHLIGHTS AND PORTFOLIO STATUS
For the fiscal year ended December 31, 2017, the Company
recorded net income of $31.1 million. Fiscal year net income was
comprised of total investment income of $65.3 million and realized
capital gains on investments of $3.3 million, partially offset by
total expenses of $32.1 million and net unrealized depreciation (or
unrealized mark-to-market loss on investments) of $5.4 million.
For the fiscal year ended December 31, 2017, the Company
received a total of $120.0 million of cash payments from its
portfolio (inclusive of proceeds from called investments), or $6.77
per weighted average common share.
As of December 31, 2017 on a look-through basis, and based on
the most recent CLO trustee reports received by such date, the
Company had indirect exposure to approximately 1,253 unique
corporate obligors. The largest look-through obligor represented
1.00% of the Company’s CLO equity and loan accumulation facility
portfolio. The top-ten largest look-through obligors together
represented 6.30% of the Company’s CLO equity and loan accumulation
facility portfolio.
Spread compression in the loan market continues to be a factor
for credit investors and the Company is not immune. Whereas in
December 2016, the look-through weighted-average spread of the
loans underlying the Company’s CLO equity and related investments
was 3.97%, that value was 3.66% as of December 2017.
As of December 31, 2017, the Company had debt and preferred
securities outstanding which totaled approximately 37% of its total
assets (less current liabilities). Over the long term, management
expects the Company to operate under current market conditions
generally with leverage within a range of 25% to 35% of total
assets. Based on applicable market conditions at any given time, or
should significant opportunities present themselves, the Company
may incur leverage outside of this range, subject to applicable
regulatory limits.
FIRST QUARTER 2018 PORTFOLIO ACTIVITY THROUGH FEBRUARY 15,
2018 AND OTHER UPDATES
From January 1, 2018 through February 15, 2018, the Company
received cash distributions on its investment portfolio totaling
$21.7 million (inclusive of proceeds from called investments), or
$1.06 per weighted average common share. As of February 15, 2018,
some of the Company’s investments had not yet reached their payment
date for the quarter. Also from January 1, 2018 through February
15, 2018, the Company deployed $36.6 million in net capital.
From January 1, 2018 through February 15, 2018, 2 of the
Company’s CLO investments were reset.
As of February 15, 2018, the Company has approximately $19.6
million of cash available for investment.
As previously published on the Company’s website, management’s
estimate of the Company’s range of NAV per common share as of
January 31, 2018 was $17.12 to $17.22.
PREVIOUSLY DECLARED DISTRIBUTIONS
The Company paid a monthly distribution of $0.20 per common
share on January 31, 2018 to stockholders of record as of January
12, 2018. Additionally, and as previously announced, the Company
declared distributions of $0.20 per share of common stock payable
on February 28, 2018 and March 29, 2018, to stockholders of record
as of February 12, 2018 and March 12, 2018, respectively.
The Company paid distributions of $0.161459 per share of the
Company’s 7.75% Series A Term Preferred Stock (NYSE: ECCA) and
Series B Term Preferred Stock (NYSE: ECCB) on January 31, 2018, to
stockholders of record as of January 12, 2018. The distributions
represented a 7.75% annualized rate, based on the $25 liquidation
preference per share for each series of preferred stock.
Additionally, and as previously announced, the Company declared
distributions of $0.161459 per share on each series of preferred
stock, payable on each of February 28, 2018 and March 29, 2018, to
stockholders of record as of February 12, 2018 and March 12, 2018,
respectively.
CONFERENCE CALL
The Company will host a conference call at 10:00 a.m. (Eastern
Time) today to discuss the Company’s financial results for the
quarter and year ended December 31, 2017, as well as a portfolio
update.
All interested parties may participate in the conference call by
dialing (833) 231-8253 (domestic) or (647) 689-4099
(international), and entering Conference ID 4588808 approximately
10 to 15 minutes prior to the call. A live webcast will also be
available on the Company’s website
(www.eaglepointcreditcompany.com) – please go to the Investor
Relations section at least 15 minutes prior to the call to
register, download and install any necessary audio software.
An archived replay of the call will be available shortly
afterwards until March 22, 2018. To hear the replay, please dial
(800) 585-8367 (domestic) or (416) 621-4642 (international). For
the replay, enter conference ID 4588808.
ADDITIONAL INFORMATION
The Company has made available on its website,
www.eaglepointcreditcompany.com (in the financial statements and
reports section), its 2017 Stockholder Letter and Annual Report,
which includes the Company’s audited consolidated financial
statements as of and for the period ended December 31, 2017. The
Company also published on its website (in the investor
presentations and portfolio information section) an investor
presentation which contains additional information about the
Company and its portfolio as of and for the quarter and year ended
December 31, 2017. The Company has filed these reports with the
Securities and Exchange Commission.
ABOUT EAGLE POINT CREDIT COMPANY
The Company is a non-diversified, closed-end management
investment company. The Company’s investment objectives are to
generate high current income and capital appreciation primarily
through investment in equity and junior debt tranches of
collateralized loan obligations. The Company is externally managed
and advised by Eagle Point Credit Management LLC.
The Company makes certain unaudited portfolio information
available each month on its website in addition to making certain
other unaudited financial information available on its website
(www.eaglepointcreditcompany.com). This information includes (1) an
estimated range of the Company’s net investment income (“NII”) and
realized capital gains or losses per weighted average share of
common stock for each calendar quarter end, generally made
available within the first fifteen days after the applicable
calendar month end, (2) an estimated range of the Company’s NAV per
share of common stock for the prior month end and certain
additional portfolio-level information, generally made available
within the first fifteen days after the applicable calendar month
end, and (3) during the latter part of each month, an updated
estimate of NAV, if applicable, and, with respect to each calendar
quarter end, an updated estimate of the Company’s NII and realized
capital gains or losses for the applicable quarter, if
available.
FORWARD-LOOKING STATEMENTS
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements other than statements of historical facts
included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of risks and uncertainties. Actual results may
differ materially from those in the forward-looking statements as a
result of a number of factors, including those described in the
Company’s filings with the U.S. Securities and Exchange Commission
(“SEC”). The Company undertakes no duty to update any
forward-looking statement made herein. All forward-looking
statements speak only as of the date of this press release.
_________________________1 “Per weighted average common share”
data are on a weighted average basis based on the average daily
number of shares of common stock outstanding for the period and
“per common share” refers to per share of the Company’s common
stock.
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